Markets

Following eight years of global economic growth, economists agree a downturn is simply a matter of when and how deep. The worst case scenario, according to Wood Mackenzie, would be a recession occurring in 2020 or 2021 – just after 60-100 mtpa of LNG has taken FID.

The spot energy index in the S&P Goldman Sachs Commodity Index (GSCI) has ended the year 21% lower than at the beginning of 2018, despite a 25% rise between January and October. The plunge of the index in the fourth quarter was caused by steep declines in crude oil and petroleum product prices.

Dominion Energy is completing the takeover of SCANA Corp. adding customers in Georgia and the Carolinas to its 18-state footprint. The merged assets, worth over $6.8 million, align well with Dominion’s regulated energy businesses. “These are well-run regulated operations that will help improve our risk profile and growth outlook," said CEO Thomas F. Farrell.

Medco Energi, Indonesia's national oil and gas company, is in talks to acquire the UK-listed Ophir Energy in a cash takeover. No amount or other details have yet been disclosed, other than Medco has to make a clear binding offer by January 28, if a deal is to proceed.

Gas-burn in the electric power sector is forecast to peak around 2035 and start declining from 2040, by when wind and solar are set to become the dominant energy sources. Data by the classification society DNV GL shows that gas demand in Europe already peaked in 2010, and will do so in North America by 2020, whereas in South-East Asia and China it will only peak in the mid-2030s.

Demand growth for natural gas in China is outpacing supply. Despite rapidly rising LNG imports, some domestic shale gas production and the scheduled start of an additional 38 Bcm of Russian gas supplies through the ‘Power of Siberia Pipeline’ before the end of 2019, analysts expect a gas deficit in in the China market from 2020 onwards.

Consultations have officially started as to whether Uniper will divest all its French power plant assets to the Central European energy investment group EPH, majority-owned by the billionaire Daniel Kretinsky. Uniper confirmed it received a unilateral binding offer from EPH, but did not disclose the value of a potential deal.

A consortium of Enagás, Snam and Fluxys has completed the acquisition of a 66% stake in DESFY, the Greek gas transmission system operator. The stake was bought from the Hellenic Republic Asset Development Fund (HRADF) and Hellenic Petroleum for € 535 million.

Colder weather in China is pushing up heating demand which is the first resilience test for the gas network. Some 3.2 million new residential gas users have been grid-connected this year, adding 4.5 Bcm in demand which comes on top of even higher demand growth from industries. Overall demand in winter 2018/19 is forecast to be 40 Bcm over last year’s levels.

Saudi Arabia’s 2019 budget has allocated 33 billion riyals ($8.8 billion) for the energy, industry, mining and logistics sectors – more than three times the amount spent in the previous budget. State spending will rise by over 7% next year to an equivalent of $295 million, and most of these higher expenses are intended to be financed through rising oil revenues.

Rising use of thermal coal in the Japanese power sector has led to a 1% drop in LNG imports in November while coal shipments increased by more than 5%. Utilities prefer coal over gas as a fuel for their power stations after the cost of LNG cargoes surged year-on-year by nearly $1 billion.

Despite rising oil prices and production levels U.S. gas fracking companies are continuing to lose money, according to a review of the Institute for Energy Economics and Financial Analysis (IEEA). In the third quarter of 2018, the 32 mid-size U.S. exploration companies reported nearly $1 billion in negative cash flows.

Switching from coal to cleaner-burning gas for power generation has led to a 28% decline in carbon dioxide emissions in the U.S. power sector. Slower growth of electricity demand also contributed to the decline, with the U.S. Energy Information Administration (EIA) calculating that power generation-related CO2 emission fell to a near 30-year low at 1,744 million metric tons (MMmt).

Norway’s gas system operator Gassco has announced the start-up of the Polarled pipeline, opening up a new supply route for supplying Norwegian gas to Europe. Spanning 482 kilometres, Polarled carries output from the Aasta Hansteen field via the Nyhamna processing plant to the UK and continental Europe.

By 2030, more than 45% of EU industrial (grey) hydrogen demand, or 10% of Europe’s natural gas consumption, could be substituted by green hydrogen which would help decarbonise the “hard-to-abate” sectors like industry and heavy transport. But not all clean hydrogen will need to be produced within the EU.

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News in Brief

Smart grid market to top $70bn by 2027

April 24 – The global Smart Grid Market is expected to reach around $70 billion, growing at an annual rate of 15.56% in the coming years through to 2027.North America is forecast to see the largest revenue growth, according to ResearchNester, while Europe also shows promising growth in smart grids due to high awareness for decentralized power generation, battery storage and conserving energy.

China eases ban on coal power

April 23 – The Chinese National Energy Administration (NEA) has allowed 11 provinces to resume building coal power plants in a move that lies bare the country’s dependency on thermal coal even after several hundred billion dollars were invested cleaner energy sources, notable wind, solar and natural gas. Areas earmarked by NEA for new coal power plants include Qinghai, Chongqing, Guangxi, Guangdong, Yunnan, Guizhou and Henan.

$500m Birdsboro plant gets powered up

April 17 – Birdsboro Power, a subsidiary of EmberClear of Canada, is in the process of commissioning the $500 million Birdsboro open-cycle gas power plant. Built on a site of the former Amourcast steel foundry, and driven by a GE 7H02 turbine, the new power unit will generate about $500,000 in revenue for the Reading Area Water Authority and another $125,000 city of Reading, Pennsylvania. All electricity will be supplied into PJM Interconnection, the power grid operator in the U.S. Northeast.

Gas now dominant fossil fuel in Europe

April 17 – Rising cost of carbon emissions and closures of coal power stations throughout Europe have led to gas-fired generation overtaking the output of other fossil fuels for the first time. According to EnAppSys figures, gas power plants in the EU produced 117 TWh of electricity in the first quarter of 2019, compared with a combined 110.9 TWh from coal, lignite and gas-to-coal plants.

ABB, Porsche co-develop electric vehicle chargers

April 16 – ABB and Porsche have agreed to develop electric vehicle chargers for Porsche Japan’s new electric vehicles, including Tayan – the carmakers’ first fully electric car due to be launched in 2020. Under the deal, Porsche will install ABB chargers at its public facilities across Japan, creating a network of fast-charging stations for its electric vehicles. The first installation is set to go live in mid-2020.

Power gen from biomass flatlines

April 15 – Increases of U.S. electricity generation from biomass have stopped after a decade of growth. Power produced from biomass totaled 70.6 million megawatthours (MWh) in 2018, or about 2% of total U.S. electricity generation, according to EIA figures. Having grown from 2004 through 2014, and the 2018 output was 2% below its peak generation of 71.7 million MWh.

Aeroderivative GT market to top $3.5bn by 2024

April 12 – The global market for aeroderivative gas turbines is seen grow at a 7% rate to surpass $3.5 billion by 2024. A main growth driver, according to Global Markets Insight, will be the rising adoption of small-scale turbine-driven cogeneration plant and the trend towards decentralized energy supply.

Lumenaza creates regional green power grids

April 11 – Utility-in-a-box software, developed by Lumenaza, creates a regional green power grid by connecting producers and consumers of locally produced wind and solar energy. The system monitors renewable power output, balances supply and demand, and can help organize the billing process. Pilot projects have been implemented with two of Germany’s big utilities, E.ON and EnBW as well as with various smaller players.

MHPS licenses H-25 turbine production to Chinese manufacturer

April 10 – Mitsubishi Hitachi Power Systems (MHPS) has agreed to license production technology for its H-25 series gas turbines to the Chinese manufacturer CSIC Longjiang GH Gas Turbine Co. The agreement will establish a small local supply chain which helps expands MHPS’ share in the Chinese market, the Japan-based company stated. So far, MHPS received five orders for H-25 Series gas turbines, or nine units in total, from Chinese power plant developers.

SIEW 2019 to focus on energy transformation

April 9 – “Accelerating Energy Transformation” will be the theme for the Singapore International Energy Week (SIEW) 2019. This theme has been chosen by the Energy Market Authority (EMA) of Singapore to address mounting challenges in Asia over meeting climate change commitments against a backdrop of continuously rising energy demand.

ENGIE launches 1st mini-grid in Zambia

April 8 – The French utility ENGIE has inaugurated its first PowerCorner – an off-grid renewable energy solution – in the Zambian village of Chitandika. Located in the East of Zambia, Chitandika counts 1500 inhabitants who previously had no access to electricity.

Global gas engine market to reach $4.4 billion by 2020

April 5 – Over the next five years, the global gas turbine market is forecast to grow 11.1% annually in terms of revenue, reaching a market size of $24,100 million by 2024, up from $14,300 million in 2019. Market-leading companies include: GE, Siemens, Ansaldo Energia, MAN Energy Solutions, Mitsubishi Hitachi Power Systems and Shanghai Electric Group.

EDAC, Siemens seek ‘industrial app’ for 3D-printing

April 4 – Siemens is intensifying its cooperation with the EDAG Group, an independent engineering company for the automotive industry, to promote industrial applications of additive manufacturing (AM), also known as 3D printing. The companies’ joint "NextGenerationSpaceframe 2.0" project is on show at the Hannover Messe this week.

ABB electrifies Lodi campus of Milan University

April 3 – The Swiss manufacturer ABB will ensure smarter, safer and more reliable electricity supply for students at the Milan University’s new campus in Lodi. Covering an area of 20,000 square meters, the campus has installed ABB’s UniSec switchgear and main distribution switchboard solution, System pro E power.

Chevron launches $90m Fund VII

April 2 – Chevron Technology Ventures (CTV) has set up Fund VII, a new $90 million fund focused on venture capital investment across the energy industry. Investments target early- to mid-stage companies as well as limited partnership funds with the aim of supporting breakthrough technologies that have the potential to improve Chevron’s oil and gas business performance.

Siemens to implement VW Industrial Cloud

April 1 – The German carmaker Volkswagen has chosen Siemens as integration partner for the VW Industrial Cloud. Based on Siemens’ MindSphere system, the VW Industrial Cloud will link production systems, machinery and equipment of various manufacturers at the 122 Volkswagen manufacturing plants worldwide. The resulting data transparency and analysis is meant to enhance productivity at the sites.

Marubeni, 4R Energy to deploy large refurbished batteries

March 29 – Marubeni Corp and 4R Energy, along with SIGNET EV have achieved a Proof of Concept (PoC) using 4RE’slarge refurbished batteries for the development of the world’s first mass-productional EV charger in Namie-machi, Fukushima-Prefecture. The installation, with an output of more than 50kW, helps the community reduce electricity demand from the central power grid, which saves costs.